Garson Gold Corp.

Garson Gold Corp.

April 28, 2009 08:00 ET

Garson Gold Confirms the New Britannia Mine Economics for First Phase of Re-Activation

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 28, 2009) - GARSON GOLD CORP. (TSX VENTURE:GG) ("Garson Gold" or "the Company") is pleased to release the results from its Preliminary Assessment ("PA" or "study") on the No.3 Zone at the Company's New Britannia Mine ("NBM") property located in Snow Lake, Manitoba. The PA was completed by Micon International Limited ("Micon") in compliance with National Instrument ("NI") 43-101.

The study assessed the economics of mining at No.3 Zone and re-activation of the 2,150 tonne per day New Britannia mill which is currently on care and maintenance. The No.3 Zone is located 1.5 kilometres from the New Britannia mine and mill and remains open for expansion down plunge. The study was based only on the mining and processing of approximately 149,000 oz gold from 830,000 tons (753,000 tonnes) at an average grade 0.179 ounces per ton (6.14 grams per tonne) from the No.3 Zone. The Company is currently updating and evaluating other gold resources on the NBM property, based on 2008 as well as historical drilling, with the objective of expanding the scope of the study and further enhancing project economics.

Garson Gold Chief Executive Officer, David Tafel comments: "We view the Preliminary Assessment as a positive step in our project development plan. We were able to confirm cash operating costs of US$362/ounce associated with reactivation. The study is based on a portion of current mineral resources contained within one of several identified zones on the NBM property. The study validates our decision to proceed with updating and evaluating property resource estimates concurrently with advancing exploration of other known mineralized zones."

Highlights of the study and results of the base case economic analysis are as follows:

No. 3 Zone Resource:

- Indicated resource of 434,000 tons (394,000 tonnes) at an average grade of 0.20 ounces per ton ("opt") (6.72 grams per tonne); approximately 85,000 ounces

- Inferred resource of 634,000 tons (575,000 tonnes) at an average grade of 0.18 opt (6.31 grams per tonne); approximately 117,000 ounces

Mining and Processing:

- Mining plan for approximately 830,000 tons (753,000 tonnes) at an average grade 0.179 opt (6.14 grams per tonne) inclusive of mining dilution and losses (approximately 149,000 ounces)

- A mining rate of 1,000 tons per day (750 tons mill feed and 250 tons waste) for a mine life of approximately 3 years and a total project life of approximately 3.8 years.

- Milling rate of 1,300 tons per day on a 4 day per week basis at an estimated recovery of 92% (approximately 137,400 ounces)

Economic Analysis:

- An after tax internal rate of return (IRR) of 18.9% based on US$ 725 per ounce gold and an exchange rate of C$1.20 per US$1.00

- Cumulative undiscounted cash flow of C$16.64 M and an NPV of C$7.73M at an 8% discount rate and an NPV of C$10.66M at a 5% discount rate.

- Pre-production capital expenditures of C$22.33M and sustaining capital expenditures of C$13.95M (undiscounted and includes a C$4.15M contingency)

- Average cash operating cost of US$362.38 per ounce or C$72.00 per ton milled

Expansion Potential:

- The No.3 Zone remains open for expansion at depth

- Several other zones on the property are at an advanced stage of assessment and exploration and have the potential to contribute to the mining plan thereby extending mine life and increasing mill throughput.


The NBM project covers approximately 4,840 hectares and hosts the historic New Britannia Gold Mine which operated from 1949 to 1958 and again from 1995 to 2004 producing approximately 1.43 million ounces of gold. The NBM property was placed on care and maintenance in 2005. Mining and processing infrastructure on the property includes a 2,150 tonne per day CIP mill and tailings management area. The permits required for mining, processing, and waste disposal are in place and can be re-activated pending the submission of a plan to resume mining to the Manitoba Government. Gold resources on the NBM property, which includes resources at the New Britannia Mine and the No.3 Zone as well as the satellite zones Birch and Margaret, total 449,000 oz (2,605,000 tonnes @ 5.37 g/t gold) in the Measured and Indicated categories and 317,000 oz (1,886,000 tonnes @ 5.22 g/t gold) in the Inferred category. (NI 43-101 Technical Reports dated April 2006, October 2006, and July 2008 are available at Garson Gold is actively evaluating these resources as well as evaluating and exploring other advanced to earlier stage opportunities on the property.


Current resources at the No.3 Zone total approximately 434,000 tons (394,000 tonnes) at an average grade of 0.20 opt (6.72 grams per tonne) in the indicated category (approximately 85,000 ounces) and 634,000 tons (575,000 tonnes) at an average grade of 0.18 opt (6.31 grams per tonne) in the inferred category (approximately 117,000 ounces). The No.3 Zone is located approximately 1.5 km north of the NBM property mill. During 1995, the No.3 Zone was mined via ramp access to a vertical depth of approximately 450 feet (approximately 140 metres) and produced approximately 25,300 ounces of gold. The PA contemplates dewatering and rehabilitating the No.3 Zone ramp and mining approximately 482,000 tons of indicated resource at a grade of 0.175 opt gold (after dilution and losses) and 348,000 tons of inferred mineral resource at a grade of 0.185 opt (after dilution and losses). Mining would resume at the 450 level and be extended to 1640 level (1,640 feet or approximately 500 metres vertical) via the extended ramp. The Long Hole mining method will be used as was successfully employed by the previous operator at the No.3 Zone and the Main Mine.

Pre-operating capital costs, which include equipment purchases and rehabilitation of the No.3 Zone ramp and surface infrastructure including the mill, have been estimated at C$22.33M. Sustaining capital, largely ramp development costs, have been estimated at C$13.95M. Both of these estimates are on an undiscounted basis and include a 25% (C$4.15M) contingency. Operating costs, including mining, processing, and G&A, have been based on detailed cost data from the previous phase of mining at the New Britannia Mine. Micon has adjusted the historical operating costs to 2009 dollars and has applied a linear regression analyses to identify the fixed and variable components of the operating costs. Utilizing a gold price of $US725 and an exchange rate of C$ 1.20 per US$ 1.00, the economic analysis completed by Micon is summarized in the table below.

LOM Average LOM Average
LOM Total (C$) NPV (C$) (C$/ton) (US$/oz)
(undiscounted) 5% 8% 10% (829,846 t) (137,405 oz)
Gross Sales 119,542 102,504 93,876 88,681 144.05 725.00
charges (824) (707) (647) (612) (0.99) (5.00)
delivery (876) (752) (690) (652) (1.06) (5.31)
Royalty (1,626) (1,394) (1,277) (1,206) (1.96) (9.86)
Net Sales
Revenue 116,216 99,650 91,262 86,210 140.05 704.83

Costs 35,308 30,879 28,608 27,230 42.55 214.14
Costs 11,676 10,096 9,292 8,805 14.07 70.82
rehandle 50 50 50 50 0.06 0.30
G&A costs 6,603 5,710 5,255 4,980 7.96 40.04
Local Taxes 750 650 599 568 0.90 4.55
Contingency 5,364 4,673 4,319 4,105 6.46 32.53
Total cash
costs 59,751 52,049 48,111 45,724 72.00 362.38

Net Cash
(EBITDA) 56,465 47,601 43,151 40,486 68.04 342.45

capital 22,330 21,638 21,249 21,000 26.91 135.43
capital 13,946 12,236 11,354 10,817 16.81 84.58
Changes in
Capital 0 193 279 327 0.00 0.00

Net cash
tax 20,189 13,534 10,269 8,342 24.33 122.44

payable 3,552 2,867 2,534 2,338 4.28 21.54

Net cash
tax 16,637 10,667 7,735 6,004 20.05 100.90

The Preliminary Assessment is preliminary in nature and includes inferred mineral resources which are considered too speculative geologically to have the technical and economic considerations applied to them that would enable them to be categorized as mineral reserves. Furthermore, there is no certainty the results projected in the preliminary assessment will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.


Planning, scheduling, and cost estimates for ramp and surface infrastructure rehabilitation and the resumption of mining from an extended ramp at No.3 Zone has been completed in-house by qualified Company personnel and has been audited and reviewed by Micon, an independent consulting firm, under the direction of William J. Lewis, P. Geo and Christopher Jacobs, CEng, MIMMM. The economic analysis was completed by Christopher Jacobs, CEng, MIMMM of Micon. A NI 43-101 compliant technical report, completed by Micon, in support of the PA, will be filed on SEDAR within 45 days of the date of this release.

Mr. Jamie Lavigne, P.Geo, is the Company's designated QP within the meaning of NI 43-101for the purpose of the PA. Mr. Lavigne, Mr. Lewis and Mr. Jacobs have reviewed and approved the contents of this press release.


Garson Gold holds a 100% interest in The New Britannia Mine (NBM) Project in Snow Lake Manitoba and the Copper Prince and the McMillan Gold Mine properties located in Ontario. The Company's flagship project is the NBM, which covers approximately 4,840 hectares and hosts the historic New Britannia Gold Mine which operated from 1949 to 1958 and again from 1995 to 2004 and produced approximately 1.43 million ounces of gold. The resource estimate at the NBM property, audited by Micon International Ltd. in accordance with CIM classifications pursuant to National Instrument 43-101, is available for viewing on SEDAR ( and Infrastructure at the New Britannia Gold Mine includes a fully-permitted 2,150 tonne per day modern mill and tailings facility, and associated plant, and equipment.

On Behalf of the Board,

David G. Tafel, CEO and Director

This news release may contain forward looking statements concerning future operations of Garson Gold Corp. (the "Company"). All forward looking statements concerning the Company's future plans and operations, including management's assessment of the Company's project expectations or beliefs may be subject to certain assumptions, risks and uncertainties beyond the Company's control. Investors are cautioned that any such statements are not guarantees of future performance and that actual performance and exploration and financial results may differ materially from any estimates or projections.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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